Salary Sacrifice into AVC. National Minimum Wage limit

Dunky62

So I am a shift worker who's pay consists of Base Salary plus shift allowance of approx. 10k. I can Salary Sacrifice in to an AVC which I can have tax free when I take my main DB Pension.
I would like to Sacrifice down to minimum wage, but my company only look at my Base Salary when calculating the limit of AVC contributions. Therefore after maximum contributions into AVC, i am still well above minimum wage in my take home pay. When I questioned this I was sent a link to HMRC guidance which does seem to indicate that shift pay should not be included in the calculation.  This is a regular and Pensionable payment which I  cannot sacrifice into my pension for some reason. Does anyone know if there may be a way round this? 

Dazed_and_C0nfused

Dunky62 said:

So I am a shift worker who's pay consists of Base Salary plus shift allowance of approx. 10k. I can Salary Sacrifice in to an AVC which I can have tax free when I take my main DB Pension.
I would like to Sacrifice down to minimum wage, but my company only look at my Base Salary when calculating the limit of AVC contributions. Therefore after maximum contributions into AVC, i am still well above minimum wage in my take home pay. When I questioned this I was sent a link to HMRC guidance which does seem to indicate that shift pay should not be included in the calculation.  This is a regular and Pensionable payment which I  cannot sacrifice into my pension for some reason. Does anyone know if there may be a way round this? 

Do you mean a way of getting money into a pension, or specifically using salary sacrifice?

Dunky62

Using Salary Sacrifice to get it into the AVC.  I cannot see any reason why the Shift Pay should not be included as it is part of my Pensionable pay. 

On-the-coast

Ask if you can make a one-off lump sum payment I February or March?

cloud_dog

I would imagine it is down to the employer.  It certainly does not appear to be a HMRC/Gov restriction.  It is usual that the percentage is calculated on the base salary, but that the deduction can include all income.  You may want to point out that the two things are not mutually exclusive, e.g. contributions are based on the contracted (base) salary, but additional taxable income (shift allowance) can be included when calculating the maximum contribution percentage.

I have a similar set up with car allowance, whereby I contribute more than my contracted salary minus NMW.  However I cannot modify the pension portal to accommodate this as it states that it would take me below NMW based on my contracted salary.  I simply email my HR department informing them of my contracted total earnings (salary plus car allowance) and can they please set the percentage to XX%.  I also show them that the deduction will not take me below NMW. They are used to me now

Marcon

Dunky62 said:

So I am a shift worker who's pay consists of Base Salary plus shift allowance of approx. 10k. I can Salary Sacrifice in to an AVC which I can have tax free when I take my main DB Pension.
I would like to Sacrifice down to minimum wage, but my company only look at my Base Salary when calculating the limit of AVC contributions. Therefore after maximum contributions into AVC, i am still well above minimum wage in my take home pay. When I questioned this I was sent a link to HMRC guidance which does seem to indicate that shift pay should not be included in the calculation.  This is a regular and Pensionable payment which I  cannot sacrifice into my pension for some reason. Does anyone know if there may be a way round this? 

Are you able to post the link, please? If you're too 'new' to post, by all means send me a Private Message and I'll post it here.

Dunky62

Hi Marcon. Here is the link I was sent.  ' Things not to include .'   is where my problem lies. I just don't understand why a regular pensionable allowance cannot be included in the calculation. I will try and speak to someone at HMRC but i believe it is a nightmare trying to speak to someone these days. Anyone got any tips?     Thanks 

https://www.gov.uk/national-minimum-wage/employers-and-the-minimum-wage

sheramber

Dunky62 said:

Hi Marcon. Here is the link I was sent.  ' Things not to include .'   is where my problem lies. I just don't understand why a regular pensionable allowance cannot be included in the calculation. I will try and speak to someone at HMRC but i believe it is a nightmare trying to speak to someone these days. Anyone got any tips?     Thanks 

https://www.gov.uk/national-minimum-wage/employers-and-the-minimum-wage

. Start to dial just before lines open  to get through first. 

Sometimes there are staff who have started work early so it is also worth trying a few minutes before  

Marcon

Dunky62 said:

Hi Marcon. Here is the link I was sent.  ' Things not to include .'   is where my problem lies. I just don't understand why a regular pensionable allowance cannot be included in the calculation. I will try and speak to someone at HMRC but i believe it is a nightmare trying to speak to someone these days. Anyone got any tips?     Thanks 

https://www.gov.uk/national-minimum-wage/employers-and-the-minimum-wage

Ah - I think I see the problem. If you (or more accurately your employer!) read on using the various links, it becomes clear that like so many things on government sites, it's misleading if taken at face value.

It sounds from your post as if your shift premium is a regular addition to your pay, which you receive regularly for salaried work - is that correct? If so, it does count for minimum pay purposes:

Overtime and shift premia

You may pay a worker at a higher rate than their standard pay rate for some of the work they do – for example for working:

• overtime, weekend or night shifts
• on bank holidays
• longer than a certain number of hours

If you do, the premium element of pay – that is, the amount by which the higher pay rate exceeds the worker’s basic rate – does not count towards minimum wage pay. This only applies to time work and output work; it does not apply to salaried hours work or unmeasured work.

Source: https://www.gov.uk/guidance/calculating-the-minimum-wage/calculating-the-minimum-wage#overtime-and-shift-premia

Dunky62

Brilliant!!  Thankyou so much Marcon for taking the time to look at this for me. I really appreciate it.  I have sent that link to my HR  Dept and told them I intend to write to HMRC with the specifics of my situation for clarification as to whether I can sacrifice more into my AVC.  Thanks again.

Dazed_and_C0nfused

Dunky62 said:

Brilliant!!  Thankyou so much Marcon for taking the time to look at this for me. I really appreciate it.  I have sent that link to my HR  Dept and told them I intend to write to HMRC with the specifics of my situation for clarification as to whether I can sacrifice more into my AVC.  Thanks again.

That probably won't help you for the current tax year though 😳